UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): ~~June~~July 203, 2006

Portrait Corporation of America, Inc.

(Exact name of registrant as specified in its charter)


Delaware	0-8550	57-1208051

(State or other jurisdiction of	(Commission File Number)	(IRS Employer Identification No.)
incorporation)


815 Matthews-Mint Hill Road, Matthews, North Carolina		28105

(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (704) 847-8011

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

OnIn ~~June 20,~~connection ~~2006, the Company entered into a Third Amendment to Credit Agreement, Waiver, Consent and Forbearance Agreement (the “Amendment”)~~ with the ~~lenders~~hiring ~~(the~~of ~~“Senior~~Thomas ~~Lenders”)~~L. ~~and Wells Fargo Foothill~~Garrett, ~~Inc~~Jr., ~~as agent~~ (~~the~~discussed ~~“Agent”~~below), ~~under its senior credit agreement dated July 15, 2005,~~ as ~~amended~~Executive ~~(the “Senior Credit Agreement”). The Amendment provides, among other~~Vice ~~things,~~President ~~a limited waiver~~ and ~~forbearance~~Chief ~~from~~Financial ~~exercising~~Officer ~~remedies~~of ~~under~~Portrait ~~the~~Corporation ~~Credit Agreement that the Senior Lenders would otherwise be entitled to exercise as a result~~ of ~~certain defaults arising from the following: (1) the Company’s failure to deliver to the Agent audited financial statements for the fiscal year ending January 29~~America, ~~2006~~Inc. (the “~~Fiscal 2005 Financials”) and the~~ Company~~’s expected failure to provide the Fiscal 2005 Financials free of any “going concern~~” ~~qualification; (2~~) ~~the Company’s failure (as more fully described under Item 8.01 below)~~, toMr. ~~make~~Garrett ~~an interest payment of $687,500 due on its 133/4% Senior Subordinated Notes Due 2010 (the “Notes”) prior to the expiration of the applicable 30-day grace period for making such payment;~~ and ~~(3)~~ the ~~expiration~~Company onentered ~~June 15,~~into ~~2006~~a ofletter ~~Agfa’s~~ agreement ~~to forbear from exercising its collection rights against the Company~~ (~~more fully described under Item 8.01 below). Provided that the Company delivers the Fiscal 2005 Financials no later than June 23, 2006 (notwithstanding the expected~~ “~~going concern~~Agreement” ~~qualification~~), ~~under~~effective the terms of the Amendment, the Senior Lenders agree to forbear from exercising any of their rights or remedies arising from any of the defaults or potential defaults described above until the earlier of: (1) July 3124, 2006~~; (2) such time as either the~~, ~~holders~~that ofsets ~~the~~forth ~~Notes~~certain orterms ~~Agfa~~regarding ~~exercise~~his ~~any~~employment. ofThe ~~their~~description ~~respective rights or remedies (or notify the Company~~ of ansuch ~~intention~~letter ~~to do so), provide written notice of refusal to enter into a forbearance~~ agreement in ~~or demand a forbearance agreement on terms unacceptable to the Agent; or (3)~~Item ~~the occurrence~~5.02 ofbelow ~~any~~is ~~other~~incorporated ~~default~~herein orby ~~event of default under the Credit Agreement or ancillary loan documents with the Senior Lenders~~reference.

ITEM 85.~~01 OTHER~~02 DEPARTURE ~~EVENTS.~~OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS

~~Interest~~On ~~Payment~~July 3, ~~Default~~2006, the Company hired Thomas L. Garrett, Jr. as its new Executive Vice President and Chief Financial Officer effective July 24, 2006. Since 2003, Mr. Garrett, 52 years old, has served as the Executive Vice President and Chief Operating Officer of Churchill Mortgage Corporation/Nations Home Funding, Incorporated, a residential mortgage company. From 2001 to 2003, he served as Senior Vice President and Chief Financial Officer for LTV Steel. From 1996-2000 he worked for Service Merchandise Company, a jewelry and home products retailer, serving as its Senior Vice President and Chief Financial Officer from 1999-2000 and its Treasurer from 1996-1998. Prior to joining Service Merchandise, Mr. Garrett served as Treasurer for Magma Copper Company for four years and with The Goodyear Tire & Rubber Company for sixteen years in various treasury management positions.

~~As described under Item 1~~Mr.01 Garrett ~~above, the Company failed to make a regularly scheduled interest payment of $687,500 on its Notes,~~ and ~~on June 14, 2006~~ the ~~30-day grace period for making such payment expired. As a result, an event of default occurred with respect to the Notes, which also caused a cross-default under the~~ Company’s ~~Senior~~entered ~~Credit~~into ~~Agreement. The Company is currently in discussions with the holders of the Notes and its Senior Lenders in an effort to obtain~~ a ~~forbearance~~ orletter ~~similar~~ agreement with respect to this interest payment. In the event that such an agreement is not reached on terms acceptable to the holders of the Notes and the Senior Lenders, these creditors will have the right to submit a notice to the Company declaring all principal and interest and other amounts due in respect of the Notes or the Senior Credit (“Agreement”), ~~as applicable,~~signed ~~immediately due and payable. The acceleration of these obligations would also trigger cross-defaults~~July 3, ~~and similar acceleration rights~~2006, ~~with respect to other indebtedness of the Company.~~ ~~While the Company is hopeful~~ that ~~such~~sets ~~discussions~~forth ~~will~~certain ~~be resolved favorably, no assurances can be given whether, or upon what~~ terms, ~~any~~regarding ~~such~~his ~~agreement may be reached~~employment.

~~Expiration~~Pursuant ofto ~~Agfa~~the ~~Standstill~~ Agreement, Mr. Garrett will serve as Executive Vice President and Chief Financial Officer. His employment will be on an “at will” basis. His annual base salary will be $265,000 per year (pro-rated for the first year), subject to annual review.

OnFor ~~June 15,~~years ~~2006~~beyond the ~~Company’s~~remainder ~~standstill~~of ~~agreement~~this ~~with~~fiscal ~~AgfaPhoto~~year, ~~ended~~Mr. Garrett ~~In that~~will ~~agreement,~~be ~~AgfaPhoto~~eligible ~~agreed~~ to ~~forbear~~receive ~~until~~a ~~June 15,~~bonus of ~~2006~~50% ~~from~~of ~~taking~~base ~~any~~salary ~~action~~based toupon ~~collect certain amounts owed by~~ the ~~Company~~achievement ~~for~~of ~~photographic~~defined ~~paper,~~performance ~~film~~goals. ~~and~~Because ~~chemicals~~he ~~purchased~~was ~~from AgfaPhoto.~~not ~~The~~involved ~~Company~~in ~~has~~developing ~~asked~~the ~~AgfaPhoto~~Company’s tobudget ~~extend~~for this ~~agreement~~fiscal toyear ~~September 30,~~and ~~2006.~~will ~~While~~serve ~~AgfaPhoto has~~for ~~verbally~~only ~~indicated~~a ~~that it would request such an extension from the bankruptcy trustee~~ portion of ~~its parent~~this ~~company~~fiscal ~~in Germany~~year, ~~there~~his ~~can~~first beyear nobonus ~~assurance~~will ~~whether,~~be ora ~~the~~guaranteed ~~terms~~minimum ~~upon~~of ~~which~~$50, ~~such an extension may be given~~000. ~~Also, to date, AgfaPhoto and the~~

Mr. Garrett will be granted options to purchase 50,000 shares, or approximately 1.2%, of the Company’s ~~have~~common ~~been~~stock. inThe ~~discussions~~terms of these options will be governed by the Company’s Stock Option Plan and, except as described below will vest in four equal annual installments. Of these options, 40,000 will be granted at an ~~effort~~exercise toprice ~~reach~~of $8.00 per share, and the remaining 10,000 will be granted at an exercise price of $26.50 per share. All options will vest upon a ~~resolution~~change in control event (which does not include an initial public offering of the Company), and must be exercised prior to or ~~compromise~~simultaneous with ~~respect~~the ~~to amounts~~change ~~owed~~in tocontrol ~~Agfa,~~transaction. ~~but~~The ~~there~~options ~~can~~will behave an eight year exercise term, unless no ~~assurance~~liquidity ~~whether~~event has occurred during that time, orin which case the option terms ~~upon~~will ~~which,~~be ~~such~~extended ato the later of 60 days following an initial liquidity event or 60 ~~resolution~~days following the next liquidity event if he is restricted by law or ~~compromise~~any ~~can~~shareholders’ agreement from exercising options in connection with the initial liquidity event. The options will be subject ~~reached~~to orcustomary ~~that~~drag-along ~~AgfaPhoto~~and tag-along provisions vis-à-vis Jupiter Partners II L.P. that will ~~not~~permit, ~~institute~~or ~~legal~~require, ~~action~~one party to ~~collect~~ ~~such~~sell ~~amounts.~~proportional

~~Pursuit~~amounts of ~~Comprehensive~~its ~~Financial~~stock ~~Restructuring~~in sale transactions initiated by the other.

AsMr. Garrett’s ~~announced~~unvested ~~today~~options bymay ~~the~~be ~~Company~~cancelled ~~in a press release, a copy of which is attached hereto as Exhibit 99.1 and incorporated~~ by ~~reference herein,~~ the Company isin ~~undertaking an effort to reach agreement on~~ the ~~terms~~event of ahis ~~comprehensive financial restructuring with the holders of its~~death, ~~11.875%~~disability, ~~senior~~termination ~~notes~~without ~~due~~cause ~~2009~~or ~~(the “Bondholders”) representing approximately 59~~resignation.5% ~~of its debt outstanding as of January 29, 2006.~~ In ~~pursuit of this objective,~~ the ~~Company~~event ~~has retained the investment banking firm~~ of ~~Berenson~~termination &for ~~Co. as its financial adviser and Cadwalader~~cause, ~~Wickersham & Taft LLP as special legal counsel to represent it in negotiations with~~ the ~~Bondholders.~~ ~~The~~ Company ~~has~~may ~~also~~cancel ~~agreed to~~all ~~pay the expenses~~ of ~~Peter~~his ~~J. Solomon & Co.~~options, ~~who~~whether ~~has~~vested ~~been~~or ~~engaged~~unvested. toIn ~~act as financial adviser to~~ the ~~Bondholders~~event ~~and~~he ~~Stroock & Stroock & Lavan LLP~~resigns, ~~who has been engaged to act as~~the ~~special~~time ~~counsel~~frame ~~for the Bondholders~~ in ~~this~~which ~~matter.~~he ~~Although~~must ~~preliminary~~exercise ~~discussions~~his ~~have commenced~~options ~~regarding~~will ~~the~~be ~~potential~~shortened ~~restructuring,~~to ~~the~~60 days ~~Company~~following ~~can give no assurance whether, or~~his ~~the terms upon which, any such restructuring might be achieved~~resignation.

~~ITEM~~In the event Mr. Garrett’s employment is terminated other than for cause or because of his failure to accept comparable employment with any successor employer following a sale of the Company, he is entitled to receive the following termination payments: (1) 12 months of his then base salary (payable over 12 months), if the termination occurs within 12 months of the commencement of his employment; (2) 75% of his then base salary (payable over 9 months), if the termination occurs between 12 months and 36 months of the commencement of his employment; and (3) 50% of his then base salary (payable over 6 months), if the termination occurs following 36 months after the commencement of his employment.~~01 FINANCIAL~~ ~~STATEMENTS~~These ~~AND~~payments ~~EXHIBITS~~will be conditioned on his execution of a full release and non-competition agreement covering the periods during which he will receive these payments.

99If, in connection with a sale of the Company, Mr.~~1 Press~~ Garrett ~~release~~is ~~issued~~offered comparable employment on comparable ~~June~~terms with an affiliate or successor of the Company, he has agreed to accept or remain in such employment for a period of 12 21months following such sale or such shorter period as may be requested of him. In the event he does not accept such offer or remain so employed, ~~2006~~he has agreed to forfeit 33% of the option grants (pro rata by exercise price) granted pursuant to the Agreement and described above.

Mr. Garrett will be entitled to participate in the Company’s employee benefit plan provided to other executive employees, except that, for purposes of that plan, his health, life, dental, 401(k) and disability benefits will be deemed effective as of the commencement date of his employment, and he will be entitled to a minimum of 4 weeks of vacation per year.

Mr. Garrett will also receive $60,000 as a moving allowance.

For purposes of the Agreement, Mr. Garrett’s employment will be deemed to have commenced on July 24, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

		PORTRAIT CORPORATION OF AMERICA, INC.
Date: June 21, 2006		By: /s/ James Robert Wren, Jr.
Date: July 7, 2006		By: /s/ James Robert Wren, Jr.
		James Robert Wren, Jr.
		James Robert Wren, Jr. Executive Vice President, General Counsel, Interim Chief Financial Officer, Treasurer and Secretary
		Executive Vice President, General Counsel, Interim
		Chief Financial Officer, Treasurer and Secretary

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